On Saturday, I showed a couple a property in Maida Vale. The property is cheap relative to the area, and we have managed to get a discount on top. The property comes with share of freehold and its own allocated parking space. It is in a secured complex with generous green spaces. These are all good boxes to have ticked from a liveability point of view. However, the wife enquired as to an advert we had in the paper a couple of weeks ago. This was a flat on the eighth floor in W2, at the edge of the block, and therefore, has unrestricted views of London and plenty of light streaming in. The property I showed them required absolutely no work. If the new tenants treat the property with respect there should be nothing to be done for the next ten years. It is immaculate.
The one in W2 looked like it had been tampered with. I couldn't place whether this was really a three bedroom. Also, the kitchen, bathroom and toilet needed doing. The investors were averse to purchasing something requiring work, purely because they did not want the hassle. We assured them we could arrange for this to get done with minimal hassle.
The objective of the purchase was as a Buy To Let investment. Something to hold for 5 years plus. Once the objective is defined, the solution often becomes self-evident. Most people who want to invest have a very vague idea of what they actually want. Part of our job is to help clarify what the aim of the investment is, which is not always as it first seems. From a liveability point of view the first property comes up trumps without a doubt. Although they are both great investment opportunities, from an investment perspective, the second property in W2, wins.
This area is backed by a thorough report done by Knight Frank, which earmarked this side of the park to rise strongly over the coming years. Obviously, the report did not foresee the uncertainties created by the Brexit vote. This, however, is a temporary blip in the scheme of things. It's rare a property report impresses me, often they are written in a very abstract and theoretical way with little bearing on what’s going on at ground level. This is very often the case with statistics published, which like to simplify and generalise areas, whilst the reality is very different. For example, property prices on Edgware Road W1 go from around £1,000 to £1,500 per sq. ft., and then for properties only a few minutes away prices jump to £4,500 per sq. ft. This report has its feet firmly on the ground. It even analyses the extra supply of units in the areas, and how many of these are actually being built. The distinction is made between planning and execution.
It is important to define the purpose of the purchase, as this even supersedes getting a discount. For example, if you’re buying a property for a long term hold, getting a 15% discount on day one is not the main consideration. An analysis needs to be done on where the area, and the block, is heading over the next five years plus and why.
The couple have dealt with us previously and have purchased blind. They agreed the W2 property deal over the weekend and it has been put in lawyers hands today. This will be a solid investment. There is huge regeneration planned for Whiteleys shopping centre and Bayswater.
The flat will rise on this wave. On a local level there is major works planned in the block as well. Although this means a large payment due from the owners, it will improve the block as a whole, so the uplift is in sync with the local area.
Agony Agent is here to help!
Q: I’m often told that I should rent my house to students. Is it worth the hassle?
A: If ever you have a property that has three or more bedrooms, then there is a good chance that you are missing out on rental income if you only have just one tenancy in place.
As I have mentioned in previous articles, it is sometimes better to rent your investment out room by room than as one large unit. In general, letting out a property to students can be a lucrative business but only IF you own the right property, in the right location.
Letting out a larger property to students has long been a great way to turn a larger house into a good income. However, during the summer months when many of these student properties are empty, you could face costly voids. Also, student tenants may go back home for a few weeks leaving the property empty and therefore posing a security risk. Criminals will be aware of which properties are vacant and crime statistics for domestic break-ins are far higher from July to September in these areas.
Students tend leave expensive equipment like TVs, computers and personal possessions in the property for long periods, and if a break in occurs not only do laptops, stereos and other equipment go missing, but anything of value belonging to the landlord is at risk too. If a property is vacant for long periods, it will usually be necessary for a weekly inspection to comply with the terms of your landlord’s insurance policy - but best to double check this.
Tips to help your tenants protect the property during the summer:
Ensure the property has a burglar alarm system and that all windows and doors have safety locks.
Ensure that the property has working smoke alarms, fire alarms, extinguishers and fire blankets.
Electrical appliances and plug sockets should all be switched off and unplugged from the wall.
Switch off the water from the mains, and look out for damp patches or possible leaks.
Another big problem in student houses are common pests including mice, slugs, fruit flies, pigeons
and sometimes even rats. Some students are messy and leave food lying about for days. Check your property for droppings and slug trails.
Although there are some issues you need to take into consideration, the student market is definitely a profitable one. We are more than happy to assist with the set-up, arranging licenses, marketing and management of any student property, so please contact me for a chat.
Sow & Reap